As businesses expand, the need for a commercial vehicle often arises. A commercial vehicle loan is an easy and convenient way to finance your business needs. In this article, we will discuss all you need to know about commercial vehicle loans – from eligibility and documentation requirements to benefits and interest rates. Read on to learn more about this helpful financing option!
Introduction to Commercial Vehicle Loan
Commercial vehicle loan is a type of secured loan availed to purchase a commercial vehicle.
The loan amount is decided by the lender based on the borrower’s eligibility, credit score, and income. The repayment tenure of the loan is usually between 1 to 5 years. The interest rate on commercial vehicle loan starts from 8.70% per annum.
Commercial vehicle loan can be availed by individuals as well as businesses. The process of availing the loan is simple and quick. Borrowers can either apply for the loan online or visit the nearest branch of the lender. Once the application is approved, the borrower will get disbursed within a few days.
Commercial vehicle loans are beneficial for businesses as they help in expanding the business operations. With a commercial vehicle, businesses can easily transport goods and materials from one place to another. It also helps in reducing the overall transportation costs incurred by the business.
So, if you are planning to purchase a commercial vehicle, then make sure to check your eligibility and compare different interest rates before availing the loan.
Features of Commercial Vehicle Loan
Commercial vehicle loans are available for a wide range of vehicles, including cars, vans, trucks, and buses. The loan amount depends on the value of the vehicle and the borrower’s credit history. The interest rate is usually fixed, and the repayment period is typically five years.
Commercial vehicle loans can be used for a variety of purposes, including purchasing a new or used vehicle, financing a lease purchase, or refinancing an existing loan.
Borrowers should compare interest rates, fees, and terms before choosing a lender.
Types of Commercial Vehicle Loans
There are many different types of commercial vehicle loans available to business owners, each with its own set of benefits and drawbacks.
The most common type of loan is the term loan, which offers a fixed interest rate and repayment schedule. However, there are also shorter-term loans, such as line of credit loans, that may be more appropriate for your needs.
Another type of commercial vehicle loan is the equipment finance loan. This type of loan can be used to finance the purchase of new or used vehicles, as well as other types of equipment.
Equipment finance loans often have very low interest rates and flexible repayment options.
Finally, there are lease financing options available for those who want to lease a commercial vehicle instead of purchasing one outright. Lease financing can be a great option for businesses that need a vehicle but don’t have the cash on hand to buy one outright.
No matter which type of commercial vehicle loan you choose, it’s important to compare the terms and conditions offered by different lenders before making a final decision. This will help ensure that you get the best deal possible and that your business is able to make its payments on time.
Who can avail Commercial Vehicle Loan
Applicant is considered to be eligible for availing commercial vehicle loan if –
- Be at least 18 years old
- Have a valid driver’s license
- Be a permanent resident or citizen,residing at the present address for atleast 2 years
- 2 years stable employment of salaried individual and 2 years business experience for self employed individual.
- Have good to excellent credit (700+)
- should be a Public sector and Private sector companies
- Trust and Societies
- School and Colleges
- Transporter
Eligibility and Documentation for a Commercial Vehicle
Eligibility for New Commercial Vehicle
- salaried with 2 year stable employment and self employed with 2 years business experience.
- all pvt ltd companies/trust/society etc seeking loan should be in existance for atleast 2 years and have to provide 2 years audited financial report.
- in case of individual borrower,first time buyer,fleet owner internal external gurantor may be required.
- Applicant must be residing at the present address for atleast 2 years.
Eligibility for Old Commercial Vehicle
- Should have an experience of 3-5 years
- Minimum 1 year ownership of atleast 2 vehicles
- Repayment track record for atleast 1 year.
Doumentation:
- A completed loan application form
- KYC(ID,Age proof etc)
- Proof of residency (utility bills, lease agreement
- Proof of income ( pay receipt, tax returns)
- Processing fee cheque
- 2 passport sized photograph
- last 6 month bank statement.
Other Documents Required:
- Existing vehicle ownership proof
- RC book and Insurance of the vehicle
- Proprietorship declaration,partnership deeds,2 year audited financials of trust, societies, partnership or pvt ltd companies,
- Loan repayment proof
- Vehicle details(make,model,year) and valuation report.
Benefits of Taking Out a Commercial Vehicle Loan
There are plenty of reasons to take out a loan for your commercial vehicle. For one, it can be a great way to get the funds you need to purchase the vehicle outright,this can save you money in the long run, .
Additionally, taking out a loan can help you build up your credit score, which can be beneficial if you ever need to take out another loan in the future.
Finally, loans for commercial vehicles tend to have lower interest rates than other types of loans, so you can save money on interest payments over time.
Interest Rates for Commercial Vehicle Loans
Interest rates on commercial vehicle loans are decided by many factors. Some of these include the type of vehicle, the purpose of the loan, the tenure and repayment schedule. The interest rate also depends on whether the loan is secured or unsecured.
The average interest rate for a commercial vehicle loan is between 11% and 13%. However, depending on the factors mentioned above, this rate can go up to as high as 20%. It is important to compare different lenders before taking a loan so that you can get the best deal possible.
You can use a commercial vehicle loan calculator to calculate your monthly repayments and compare different interest rates. This will help you make an informed decision about which loan is best for you.
| BANK | INTEREST RATES | ADDITIONAL CHARGES |
|---|---|---|
| HDFC BANK | 8.70% TO 21.25% pa | Processing fee-1.5% of loan amount |
| KOTAK MAHINDRA BANK | 11% to 24% pa | Processing fee-2% of loan amount Documentation charges-up to Rs5000 |
| AXIS BANK | 10.25% to 15% pa | Processing fee-Rs 5000 |
| ICICI BANK | Depends upon tenure of loan and customers Profile | Documentation charges-Rs350 |
| Commercial Vehicle Interest rates |
Conclusion
A commercial vehicle loan can be a great way to finance your business’s fleet of vehicles.
Before taking out a loan, you should always do your research and carefully consider all the different factors that come with such an agreement, like interest rate, eligibility requirements, repayment terms and more.
Taking out a commercial vehicle loan could potentially help boost your business in the long run; however it is important to ensure that you choose the right lender for you and get familiarized with all the details of the loan before signing any contract.
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FAQs about Commercial Vehicle Loans
A commercial vehicle loan is a type of financing that helps businesses purchase vehicles, such as cars, trucks, vans, or buses. This type of loan can be used for both new and pre-owned vehicles.
Generally, companies or business owners who use the vehicles for business purposes are eligible for this type of financing. However, some lenders may have additional requirements, such as minimum annual revenue or credit score.
There are several benefits of taking out a commercial vehicle loan, including:
You can purchase the vehicle outright, which gives you full ownership and control over it.
You can choose from a variety of repayment terms to suit your cash flow needs.
It can be easier to get approved for a commercial vehicle loan than other types of loans, such as personal loans or lines of credit.
Interest rates on commercial vehicle loans are often lower than those on other types of loans.
To apply for a commercial vehicle loan, you will need to provide the lender with financial information about your business, such as your revenue and expenses. You will also need to detail how you intend to use the vehicle. The lender will then assess your application